Eastland Construction Co. v. Keasbey and Mattison Co., 20094.

• Citation: 358 F.2d 777
• Decision Date: 21 March 1966
• Docket Number: No. 20094.,20094.
• Parties: EASTLAND CONSTRUCTION CO., Inc., Appellant, v. KEASBEY AND MATTISON COMPANY, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

358 F.2d 777 (1966)

EASTLAND CONSTRUCTION CO., Inc., Appellant, v. KEASBEY AND MATTISON COMPANY, Appellee.

No. 20094.

United States Court of Appeals Ninth Circuit.

March 21, 1966.

Joseph L. Alioto, Maxwell M. Blecher, San Francisco, Cal., for appellant.

Henry T. Reath, Duane, Morris & Heckscher, Philadelphia, Pa., Bradley M. Walls, Austin, Burns, Appell & Smith, New York City, Christopher M. Jenks, Robert A. Keller, III, Orrick, Dahlquist, Herrington & Sutcliffe, San Francisco, Cal., for appellee.

Before MADDEN, Judge of the Court of Claims, and MERRILL and BROWNING, Circuit Judges.

BROWNING, Circuit Judge.

On June 1, 1962, an indictment was returned in the Eastern District of Pennsylvania charging the Keasbey and Mattison Company and the Johns-Manville Corporation with restraining and monopolizing commerce in asbestos-cement pipe in violation of the Sherman Act.¹ On the same day, Keasbey sold its asbestos-cement pipe business, including a plant located within the Northern District of California, and has done no business in California since.

On November 18, 1964, Eastland Construction Company, Inc., filed a treble damage action² against Keasbey and Johns-Manville based upon the antitrust violation alleged in the June 1, 1962, indictment. The complaint alleged that Eastland, whose principal place of business was in the Northern District of California, purchased substantial quantities of Johns-Manville asbestos-cement pipe from 1952 to the date of the filing of the complaint, and was compelled to pay substantially higher prices because of the antitrust violation alleged in the indictment.

The district court granted Keasbey's motion to dismiss the complaint for improper venue because Keasbey was not transacting business in the Northern District of California on the date the complaint was filed.

Under section 12 of the Clayton Act, 38 Stat. 736 (1914), 15 U.S.C.A. § 22,³ an antitrust suit may be brought against a corporation in any district in which it "transacts business." The question presented is whether this phrase refers to the time when suit is filed, as the district court held, or when the cause of action accrued.⁴ The decisions on this question are divided.⁵

The language of section 12 of the Clayton Act furnishes the principal argument in favor of selecting the time of filing the complaint in the private action as the crucial date. Section 12 is written in the present tense, not the past; and apparently all assume that the alternate grounds for venue (where the corporate defendant "is an inhabitant" or "may be found") refer to the date of filing. Moreover, the argument runs, in other instances Congress used explicit language in laying venue in the district where the wrongful act occurred (or the cause of action arose),⁶ or in the home district of a favored plaintiff,⁷ and Congress could as easily have done so in section 12 if this had been its intention. It may also be argued, as Professor Wright does in connection with the general venue statute (28 U.S.C.A. § 1391(c)),that "since venue is an attempt to provide for the convenience of the parties, it would seem that the status as of the commencement of the action, rather than some earlier time, should control * * *." 1 Barron & Holtzoff, Federal Practice & Procedure, 1965 Supp. § 80, p. 204.

Nevertheless, we conclude that under section 12 of the Clayton Act, venue is properly laid against a corporate defendant in any district in which the defendant was transacting business when plaintiff's cause of action accrued. We do so primarily because of the construction which the Supreme Court placed upon the legislative history of section 12 in Eastman Kodak Co. v. Southern Photo Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684 (1927); United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L. Ed. 1091 (1948); and United States v. National City Lines, Inc., 334 U.S. 573, 68 S.Ct. 1169, 92 L.Ed. 1584 (1948).⁸

In all three cases the Court concluded that the purpose of Congress in laying venue in antitrust cases where a corporate defendant "transacts business" was to enable an injured person to sue for redress in his home district, rather than being forced to sue in a distant district in which a foreign corporation inflicting the injury "resides or is found," as would have been necessary under prior law section 7 of the Sherman Act, 26 Stat. 210 (1890) — Congress's underlying assumption being that antitrust injuries usually result from business activity of the corporate offender occurring in the victim's home district. Eastman, 273 U.S. at 372-373, 47 S.Ct. 400; Scophony, 333 U. S. at 808, 68 S.Ct. 855; National City Lines, 334 U.S. at 582 n. 17, 582-583, 587-588, 68 S.Ct. 1169.

Most of the relevant legislative history is summarized in the National City Lines opinion, 334 U.S. at 582-587, 68 S.Ct. 1169. As the Court pointed out, amendments were sought during House debate "to give the plaintiff the right to bring suit and have it tried in the district where the defendant had committed violations of the Act and inflicted the forbidden injuries." 334 U.S. at 583, 68 S. Ct. at 1175 see 51 Cong.Rec. 9189-90, 9414-15, 9417, 9467 (1914). In this connection, Congress's attention was specifically called to the problem presented by the present case. Congressman Summers proposed that there be added to the section the language "where the cause of action or any part thereof arises." In support of his amendment he said, "Suppose a corporation or individual goes into a certain locality and there inflicts an injury and then withdraws its agent from this territory. Is this Committee in favor of driving the man who suffered the injury to a foreign jurisdiction to get his remedy?" 51 Cong.Rec. 9607-08 (1914).

Congress did not adopt the proposed amendments. Instead, Congress added the "transacts business" language to section 12. The Supreme Court concluded that Congress intended the "place of injury" basis for venue, which was tendered in the rejected amendments, to be encompassed within the "transacts business" language which was adopted in their stead.⁹

The Supreme Court also rejected the argument that section 12 permitted the district court to deny antitrust plaintiffs the right to sue where the injury occurred by balancing plaintiffs' convenience against the convenience of the defendants. The Court pointed out that Congress

"was not confronted with any problem of abuse by plaintiffs in selecting venue for antitrust suits; nor was it concerned with any question of providing means by which the defendants in such suits might defeat the plaintiff\'s choice to serve their own convenience. Congress\' concern was quite the opposite. It was to provide broader and more effective relief, both substantively and procedurally, for persons injured by violations of its antitrust policy.15 Insofar as convenience in bringing suit and conducting trial was involved, the purpose was to make these less inconvenient for plaintiffs * *." (National City Lines, 334 U.S. at 581, 68 S.Ct. at 1174)

15. The Clayton Act hardly can be regarded as a statute for the relief of corporate defendants in antitrust proceedings from either procedural or substantive abuses. See Levy, the Clayton Law — An Imperfect Supplement to the Sherman Law, 3 Va.L.Rev. 411.

This did not mean that Congress intended to give plaintiffs an arbitrary choice of any possible forum. "But neither was it willing to allow defendants to hamper or defeat effective enforcement by claiming immunity to suit in the districts where by a course of conduct they had violated the Act with the resulting outlawed consequences." 334 U.S. at 588, 68 S.Ct. at 1177.

Additional support for the conclusion that under section 12 venue is determined by a corporate defendant's business activity when the injury is inflicted rather than when suit is filed is found in the Supreme Court's remark in Scophony that in view of the "transacts business" language in section 12, "a foreign corporation no longer could come to a district, perpetrate there the injuries outlawed, and then by retreating or even without retreating to its headquarters defeat or deday the retribution due." 333 U.S. at 808, 68 S.Ct. at 862.¹⁰

We conclude that the requirements of section 12 are satisfied if when the cause of action accrued the corporate defendant transacted business in the district in which suit is filed.¹¹

The judgment appealed from is reversed.

1 26 Stat. 209 (1890), as amended, 15 U.S. C.A. §§ 1 and 2.

2 Sec. 4 of the Clayton Act, 38 Stat. 731 (1914), 15 U.S.C.A. § 15, provides, in pertinent part:

"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor * * * and shall recover threefold the damages by him sustained * * *."

3 Sec. 12 of the Clayton Act, 38 Stat. 736 (1914), 15 U.S.C.A. § 22, provides:

"Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any judicial district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found." (Emphasis added.)

4 Eastland contends that the critical date under § 12 is the date the government's indictment was returned. We reject this argument for the reason stated in note 11.

5 Cases holding that under § 12 of the Clayton Act the controlling facts are those existing when the action is commenced include Sunbury Wire Rope Mfg. Co. v. United States Steel Corp., 230 F.2d 511, 512-513 (3d Cir. 1956); City of Philadelphia v. Morton Salt Co., 248 F.Supp. 506, 509-510 (E.D.Pa.1965); School Dist. of Philadelphia v. Kurtz Bros., 240 F.Supp. 361, 364 (E.D.Pa. 1965); Commonwealth Edison Co. v. Federal Pac. Elec. Co., 208 F.Supp. 936, 939, 943 (N.D.Ill.1962); Schreiber v. Loew's Inc., 147 F.Supp. 319, 324 (W.D. Mich.1957); Newmark...